Anyone who has ever played a few games of Call of Duty or Halo online knows that communities like Xbox Live aren’t exactly models of good behavior. But the federal government believes the occasional bursts of profanity may not be the worst of what’s going on according with consoles, and it wants a way to dig deeper.

According to forensic experts, pedophiles are increasingly using gaming systems to exploit children, while terrorists are using it for communication. With this evidence, a contract was awarded on April 5 by the Naval Supply Systems Command to Obscure Technologies for the research and development of “hardware and software tools that can be used for extracting data from video game systems.”

With today’s practice of owners jailbreaking consoles in order to play pirated games, gaming companies have fought back with hard-to-break encryptions. As a result, the extraction of data, according to the contract, is a rather complex process and one that the Department of Homeland Security believes can only be achieved by Obscure Technologies. For the small San Francisco computer diagnostics and forensics company, likely with sales under $500,000 and less than five employees, the contract award was for a sum of $177,235.50.

“Analysis of the game systems requires specific knowledge of working with the hardware of embedded systems that have significant anti-tampering technology. Obscure Technologies has substantial experience in working with such systems. Obscure Technologies has the ability to do cradle-to-grave turnkey servicing of complete hardware systems design,” the contract states. But what may have attracted the government to this company was its lead engineer’s ability to reverse engineer Microsoft’s Xbox.

According to Foreign Policy, which first broke the story, law enforcement agencies came to the Department of Homeland Security’s Science and Technology Directorate requesting a system that can extract data from consoles. The DHS then delegated the responsibilities of heading the research and executing the contract to the Naval Postgraduate School.

With the multi-function nature of modern consoles, including access to social networking profiles, the Internet and peer-to-peer messaging, there’s plenty of interest to law enforcement, but it’s difficult to access. Under the impression that game console data is impervious to being hacked and therefore safe from authorities, pedophiles have in fact been using consoles as a haven for exploitation. In 2008, the FBI announced the alarming rate with which Xbox Live was being used by pedophiles for luring and communicating with children.

Aware of the issues surrounding privacy, the contract explicitly states that Obscure Technologies will only crack consoles purchased out of the United States for the duration of the research. As for the data to be extracted from the overseas consoles, the DHS plans on making their research and data publicly available at conferences and academic journals, but under the “constraints of the Common Rule (CFR 46) governing the use of human subject data.” In other words, any identifiable information pertaining to the owner of the consoles will be scrubbed.

While law enforcement officials have expressed their interest in obtaining gaming information for the purpose of identifying predators and terrorists, you can’t help but wonder about how officials will begin using the to be developed technology for the other purposes, as well.